Pension Pulse

This is a bilingual comment, bear with me, I will translate the key points below. Julien Arsenault of La Presse Canadienne reports, Sabia repart de Davos avec beaucoup d'interrogations : Que ce soit en raison des risques géopolitiques, de la montée du protectionnisme ou de l'arrivée du républicain Donald Trump à la Maison-Blanche, le président et chef de la direction de la Caisse de dépôt et placement du Québec (CDPQ), Michael Sabia, repart du Forum économique de Davos avec de nombreuses interrogations. Tout cela n'est toutefois pas suffisant pour l'inciter à modifier les stratégies mises en place au cours des dernières années par l'investisseur institutionnel, dont l'actif atteignait 254,9 milliards en date du 30 juin dernier. «Je n'ai pas changé d'avis. Avec un monde incertain, notre stratégie est de bien sélectionner les actifs et de nous éloigner, dans la mesure du possible, des risques du marché», a-t-il dit, jeudi, au cours d'un entre...

Jonathan Rochford, portfolio manager at Narrow Road Capital, wrote a guest comment for ValueWalk, The Dallas Pension Fiasco Is Just the Beginning (h/t, Jim Leech): The recent blow-up of the Dallas Police and Fire Pension System was entirely predictable. Whilst it is tempting to blame unusual circumstances for the recent lock-up of redemptions and likely substantial reductions to pensions for those still in the fund, many other American pension funds are heading down the same road. The combination of overpriced financial markets, inadequate contributions and overly generous pension promises mean dozens of US local and state government pension plans will end up in the same situation . The simple maths and political factors at play mean what happened at GM, Chrysler, Detroit and now Dallas will happen nationwide in the coming decade. So, what’s happened in Dallas and why will it happen elsewhere? The Dallas pension scheme has been underfunded for many years with the situation acce...

Jacqueline Nelson of the Globe and Mail reports, Teachers eyes new tack after 25 years : Ontario Teachers’ Pension Plan first began to lead the Canadian pension funds’ shift from sleepy, passive investors to globe-trotting deal makers 25 years ago. What Teachers started in 1991 with a few million dollars and its first direct private equity investment has grown into a multibillion-dollar private-capital group active around the world. Others have followed, with new funds specializing in buyouts and turnarounds emerging and more institutional investors seeking to boost their exposure to alternative investments. Now wrapping up a landmark year, Teachers Private Capital is giving more thought to selling some investments into the hot market . “We’ve probably been more focused on taking advantage of where prices are today and lightening up on some of our holdings than we have been on adding new companies to our portfolio,” says Jane Rowe, head of Teachers Private Capital division, ...

Indulai PM and Jochelle Mendonca of India's Economic Times report, Apax Partners sells 48% of GlobalLogic to CPPIB in $1.5 billion deal : Apax Partners has sold half its 96% stake in GlobalLogic, an IT outsourcing firm founded by four IT Titans, to Canada’s CPP Investment Board. The financial terms weren’t disclosed, but people in the know said the transaction valued the digital products development company at $1.5 billion (Rs 10,235 crore). That means a big payday for Apax, as the private equity firm will end up making more than three times money on a four-year-old investment . Apax acquired GlobalLogic in 2013 for $420 million from a clutch of financial investors, including a PE fund managed by Goldman Sachs, Westbridge, New Atlantic Ventures and Sequoia. It will continue to own 48% of the US-based firm, with the management team holding the rest, the people said. Both CPPIB and Apax will become co owners of the company. The transaction would be one of the biggest priva...

On Friday morning, Zero Hedge published a comment, Guggenheim: "3% Is The Beginning Of The End" : The debate over what yield on the 10Y spells the end of the 30 year bond bull market, and would spillover into selling among other asset classes, is heating up. Earlier this week, in his monthly annual letter Bill Gross wrote that 2.6% is the only level for the market that matters: "This is my only forecast for the 10-year in 2017. If 2.60% is broken on the upside – if yields move higher than 2.60% – a secular bear bond market has begun . Watch the 2.6% level. Much more important than Dow 20,000. Much more important than $60-a-barrel oil. Much more important that the Dollar/Euro parity at 1.00. It is the key to interest rate levels and perhaps stock price levels in 2017." Later that day, during his webcast with investors, Doubleline's Jeff Gundlach slammed Gross as a "second tier bond manager" for his "forecast", and countered that ...

Bruce Einhorn and Heejin Kim of Bloomberg report, A Scandal at Korea’s Retirement Giant : With 546 trillion won ($456.5 billion) in assets, South Korea’s public National Pension Service is the world’s third-largest pension fund, behind Japan’s and Norway’s. It’s also become a part of the widening scandal surrounding impeached President Park Geun-hye. On Dec. 31, a Seoul court issued a warrant for the arrest of Moon Hyung-pyo, chairman of the NPS. He was suspected of having pressured the fund, when he was a government minister, to support the controversial merger of two Samsung Group-affiliated companies. Moon’s lawyer said the chairman denied the allegations, according to reports in Korean media. Authorities also want to know whether Samsung made donations to benefit a confidante of the president in exchange for help getting NPS support . Jay Y. Lee, Samsung’s heir apparent and de facto leader, was summoned to be questioned as a suspect on Jan. 12. Both Samsung and Lee have deni...

Julia La Roche of Yahoo Finance reports, Kyle Bass: 'Global markets are at the beginning of a tectonic shift' : Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, says that global markets are at the “beginning of a tectonic shift.” “ Today, global markets are at the beginning of a tectonic shift from deflationary expectations to reflationary expectations . What happens to economies at maximum leverage when interest rates begin to rise? Reconciling the potent strengths of the world’s largest economies with their inherent weaknesses has revealed various investable anomalies. The enormity of the apparent disequilibrium is breathtaking, making today a tremendous time to invest,” Bass wrote in a year-end letter to investors seen by Yahoo Finance. He added: “One opportunity in particular has the greatest risk-reward profile we have ever encountered in our decade of being a fiduciary.” He didn’t provide specifics about the opportunity in the letter . ...